Short-term loans should not make you jump through hoops as they are mostly used to fund unforeseen expenses. Small loans do not last more than 12 months, but emergency loans are required to be paid back in fell one swoop, which the repayment length in that case cannot be more than a month.
A few lenders out there might be willing to offer you an instalment payment plan, which is either weekly or bi-weekly, but the repayment length will be about a month. As a matter of fact, there are some loans that become due on the day after your payday even though they are due after a period of 14 days.
Short-term loans sound very convenient and convenience costs a lot of money. They charge higher interest rates than long-term loans. Bear in mind the total cost of the debt is calculated based on the annual rates, not just based on interest rates.
Because you can pay off the whole debt in one go, you think it is a wiser option. You do not have to be tied to payments for a long time, but there is more to it than meets the eye.
If you fall behind on the payment, interest penalties and late payment fees will be added. It will be even more difficult for you to clear the debt on the next due date. As a result, you will keep rolling over the loan, and by the end of the year, you will find you have accumulated an inordinate amount of debt. The annual rate of small loans can be up to 1500%, which means you will be paying £1,500 if you keep rolling over a loan worth £100 for a full year, which has an annual rate of 1500%.
For short-term loans, you can get the nod for this instant
Here are the loans for short terms that you can get without further ado. It is vital to carefully gauge your repaying capacity and understand how loan works and what impact they will have on your finances in case of a default.
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Payday loans
Payday loans are typically aimed at bad credit borrowers. The major benefit that cannot be overlooked is that they do not run hard checks, so your credit score will remain intact. As the name suggests, the loan will be due on the following day of your payday. The repayment length of these loans is 14 days. However, sometimes it can be a month.
Because the loan is approved without a credit check, a lender will be sceptical about your repaying capacity and therefore they will charge high interest rates. Your repaying capacity will be determined base don your financial details you provide.
- Payday loans do not help contribute to your credit score whether you clear the dues on time.
- Defaults or missed payments will be reported to credit reference agencies. Your score will quickly plummet.
- Payday loans are the most expensive loans. 0.8% is charged as per-day interest.
Only if the reason for borrowing is urgent should you use payday loans. They can throw you into an abyss of debt if you throw caution to the wind.
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Instalment loans
Instalment loans are much more affordable than payday loans and they are ideal for funding big expenses too such as wedding, vacation, medical treatment and so forth. Instalment loans are entirely different from payday loans even though you can get them approved without more ado.
The minimum size of the debt must be at least £1,000, so monthly instalments can be drawn. The smallest repayment period of these loans is up to three months. However, bear in mind that they will peruse your credit report. No lender will sign off on your application simply based on the details you provide in the application form.
Because these loans are not secured, interest rates will be high and even higher when your credit rating is not up to scratch. Yet, you will find them more affordable than payday loans.
- Instalment loans can improve your credit score, provided no defaults are made.
- You can easily fine-tune your budget and, therefore, will not find it difficult to keep up with payments.
- In case your bad credit report gets in your way of borrowing, you can arrange a guarantor or apply with a co-applicant.
Though instalment loans are quite affordable, you are advised to be cautious of an unexpected turn in your financial situation. Have a alternative plan, so you do not struggle with payments.
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Credit cards
Credit cards are a convenient source to fund your small needs. The best thing about these loans is that you do not have to pay interest on your balance. Every time you make a purchase, a bill is generated with a grace period within which you are allowed to clear your balance. Interest is charged when the grace period is over.
A line of credit is also part of easy loans without guarantor. It is similar to a credit card with the only difference that they do not offer a grace period. Interest is charged on the amount used. In other words, if you have paid half of the balance, interest will be charged only on the unpaid balance.
- Credit cards and a line of credit may provide you with lower deals only when your credit score is good.
- In some cases, lenders may allow you with an instalment payment card. However, your financial situation should be strong apart from your credit history.
- If you fail to pay within the grace period, interest will be charged per day basis. You will soon end up racking up your credit card debt.
To sum up
There are various short-term loans that you can get easily approved for, even if your credit score is not so good. However, to avail yourself of better interest rates and credit card deals, it is always suggested that you keep your credit profile good. The higher the credit rating, the better deals you will get. But do not underestimate the importance of savings.
